Skip to content

Bank Responsibility: Refunding Provisional Credit

Answered by: 

Question: 
REG E Question: A customer authorized a purchase for a product. The product has not been received and the customer contacted the company and found out that the company has filed for bankruptcy. Our customer then filed an unauthorized affidavit for his refund. Is the bank responsible for refunding the provisional credit when the customer did say in his response that he did authorized the purchase?
Answer: 

Since the customer authorized the original purchase, and the correct amount was withdrawn from the account, this transaction does not meet the definition of an "unauthorized" or "incorrect" electronic funds transfer in Section 205.11(a). Therefore the transaction is not covered under Reg E.

If the purchase was made using a VISA or MasterCard debit card, the bank does have a contractual obligation with the card brands to assist the customer in recovering the funds using the chargeback process. File MasterCard chargeback code 4855 "Goods or Services not Received" or VISA chargeback code 30 (Member message 2) "Merchandise not Received." If the merchant cannot prove that the customer did receive the merchandise, the bank will win the chargeback. If the merchant proves that the customer did receive the merchandise, then the customer loses the claim.

First published on BankersOnline.com 11/7/11

First published on 11/07/2011

Filed under: 
Filed under compliance as: 

Banker Store View All

From training, policies, forms, and publications, to office products and occasional gifts, it’s available here:

Banker Store

hot right now

image description

Looking for effective, convenient training on a particular subject?

BOL Learning Connect offers more than 200 courses ON-DEMAND or on CD ROM from AML to Reg Z and every topic in between.

Search Topics